DOJ Joins Lawsuit Against Major Insurers Over Alleged Medicare Kickback Scheme
Washington, D.C. – May 5, 2025 – Federal prosecutors have officially joined a lawsuit against three of the nation’s largest health insurance companies—Aetna, Humana, and Elevance Health (formerly known as Anthem)—accusing them of being involved in a significant kickback scheme that allegedly defrauded the Medicare system and jeopardized the well-being of vulnerable citizens, particularly seniors and individuals with disabilities.
Background of the Allegations
The lawsuit, recently unsealed in a Boston federal court, describes a conspiracy in which these major insurers illicitly paid hundreds of millions of dollars in commissions to insurance brokers. According to the complaint, these payments were intended to incentivize brokers to promote Medicare Advantage plans that may not have suited the needs of their clients.
Originally filed by whistleblower Andrew Shea, a former executive at the online insurance brokerage eHealth, the case outlines how brokers were allegedly swayed to favor certain plans, thus prioritizing insurer profits over patient care.
The Nature of the Alleged Kickbacks
From 2016 to 2021, the complaint asserts that the companies covertly funneled funds under the guise of misleading “marketing” or “administrative” fees to brokers. This arrangement reportedly allowed brokers to focus solely on selling preferred plans, often disregarding what might be the best options for their clients.
“In public statements, the Defendant Brokers claimed to be ‘unbiased’ and ‘carrier-agnostic,’ and to ‘have your best interests in mind,’” states the complaint. “In private, however, the Defendant Brokers repeatedly directed Medicare beneficiaries to plans offered by the insurers that paid them the most money.”
The Justice Department alleges that these tactics not only defrauded Medicare but also significantly skewed consumer choice in the marketplace.
Discrimination Against Disabled Beneficiaries
In an unprecedented claim, the lawsuit suggests a deliberate effort by the insurers to reduce enrollment among disabled Medicare beneficiaries, considered more expensive to insure. It is alleged that Aetna and Humana worked in tandem with brokers to discriminate against these individuals by rejecting or avoiding referrals from them.
The complaint points out potential violations of federal laws that prohibit discrimination against Medicare-eligible individuals with disabilities, requiring Medicare Advantage Organizations to accept all eligible applicants regardless of their health status.
Responses from the Defendants
Representatives for Aetna and CVS Health firmly rejected the allegations, asserting that their marketing strategies and broker compensation practices are consistent with the regulations set forth by the Centers for Medicare & Medicaid Services (CMS).
“We dispute the allegations and intend to defend ourselves vigorously,” stated a spokesman for Aetna and CVS Health. Similarly, Elevance expressed its disagreement with the claims, pledging a robust defense.
SelectQuote, another defendant named in the complaint, echoed this sentiment, emphasizing their adherence to regulations and the integrity of their operations.
“In over 40 years of assisting Americans find suitable coverage, we have always complied with applicable laws,” said SelectQuote CEO Tim Danker, describing the claims as baseless.
Legal Ramifications
The allegations outlined in the lawsuit represent serious violations of federal Anti-Kickback Statutes and the False Claims Act, which aim to prevent financial incentives that could distort healthcare decisions. The companies could face significant penalties, as the government is seeking treble damages and could claim up to $27,894 for each false submission to Medicare.
Despite the lawsuit not specifying the total financial damages being claimed, its implications could be profound, especially given that it targets a sector serving over 33 million Americans and constitutes more than half of all federal Medicare spending.
Conclusion
The lawsuit, which is currently pending in the U.S. District Court in Boston, underscores a growing scrutiny of the practices employed by health insurers in the Medicare Advantage sector. If the allegations are proven true, this case could be one of the largest instances of fraud within the Medicare system in recent years, significantly impacting the health coverage landscape for millions of individuals. The ongoing proceedings are likely to draw considerable attention as they examine the intersection of healthcare, ethics, and regulatory compliance in insurance practices.
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